Analysts have cautioned that a weakened dollar may hinder the full recovery of global markets, as investors continue to grapple with the fallout from the Trump tariff chaos.
The DXY index, which measures the dollar's value against a basket of currencies, plummeted to its lowest in three years during Monday trading, as reported by .
This followed a market plunge after President Donald Trump's 'Liberation Day' levies led shareholders to abandon equities for safe haven investments.
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Although the 90-day pause on tariffs allowed markets to recoup some gains, significant losses persisted.
Over the past month, the FTSE 100 has dropped over five per cent, France's Cac 40 nearly ten per cent and Amsterdam's AEX nearly seven per cent.
On Wall Street, the Dow Jones has tumbled nearly four per cent and the S&P 500 nearly five per cent.
Barclays analysts commented: "The 90-day pause on higher reciprocal tariffs was a welcome reprieve, but it by no means marked the end of the story."
"Erratic policy and governance likely cap the upside, as an edgy treasury market and weaker dollar undermine confidence."
Quality stocks in favour due to recession risk
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US bond yields have skyrocketed in the aftermath of the tariff fallout, sparking investor concerns.
The yield on a 30-year government bond has surged as high as five per cent.
"The combination of rising US yields and depreciating dollar is fuelling credit concerns, making balance sheet strength a key differentiator for investors," analysts noted.
As a result, analysts have enhanced their stance on 'Quality' European stocks to 'Positive', while downgrading their opinion of 'Value' stocks to 'Neutral.'
They elaborated that the long-term prospects for 'Value' stocks — those linked with higher risk and rewards — "remains positive", but expressed concerns over "crowded tactical positioning and higher recession risk."
'Quality' stocks, which are typically viewed as more secure investments, are anticipated to continue performing well if fears related to an economic downturn and credit issues intensify.
Within the FTSE 100, prominent firms such as HSBC and Unilever fall into the category of 'Quality', in contrast to companies like BT Group and ITV which are classified under 'Value.'